All the warning signs are there. Last time around, it was clear that the problem was in the mortgage market, so it was a lot easier to know which investments to avoid. Now the danger is spread out into unnamed companies (except for naming GE). I use various figures of merit to weed out companies on the brink. I hope that caution will give me some protection in the coming crash. Also, I am letting my dividends accumulate. I am in no hurry to reinvest them in the stock market. What are you doing to protect yourself?

Friston’s free energy principle says that all life, at every scale of organization—from single cells to the human brain, with its billions of neurons—is driven by the same universal imperative, which can be reduced to a mathematical function. To be alive, he says, is to act in ways that reduce the gulf between your expectations and your sensory inputs. Or, in Fristonian terms, it is to minimize free energy.

I found the article rather fascinating to read. I had feelings of getting close to understanding something important, with the realization that I had a lot of research to do to understanding what was new in AI which was a subject I only barely understood in the first place.

Middle-class households prominently own houses, while the top-10% predominantly own shares and business equity. This gives rise to a race between the housing market and the stock market in shaping the wealth distribution. Housing booms lead to wealth gains for leveraged middle-class households and tend to decrease wealth inequality. Stock market booms primarily boost the wealth at the top of the wealth distribution. Asset price changes can therefore lead to major changes in the wealth distribution. Over extended periods in postwar American history, such portfolio valuation effects have been key drivers of shifts in the U.S. distribution of wealth.

he more I think of this, the more I realize that this should come as no surprise.

As I saw people prior to 2007 refinancing their houses to take out the equity in cash, the more I warned that home equity should not be used as a piggy bank to make up for lack of income gains in the economy.

In 2006, we retired and returned to Massachusetts from Oregon. I could see the end of the real estate boom coming, We decided that we’d better harvest our Oregon real estate gains and move back to Massachusetts while we could still afford to do it. It has taken 12 years for our Massachusetts house to barely regain the value it had in 2006. Meanwhile, the stock market has been very kind to us,

The recent Trump tax cuts to the wealthy went mostly into raising stock market prices, and nothing else.

All this would be a bit less problematic if the Democratic Party had overcome its allergy to deficit spending (and/or accepted Modern Monetary Theory as its personal truth). But it hasn’t: In addition to forbidding tax increases on the bottom 80 percent, Pelosi has vowed to honor the “pay as you go” rule, which requires the House to fully finance any and all new government spending.

The article focuses on the roadblock to tax increases on the bottom 80 percent, but only mentions “pay as you go” in passing. The second item is particularly stupid. Deficits and increasing deficits play a role in economic planning. If we should have a sudden increase in our trade deficit, the federal government might need to increase their deficit to replenish the money leaving the country in foreign trade. If the Democrats take a stance against deficits no matter what the economy requires, they are not only not doing their jobs, but they don’t seem to understand what their jobs are.

“Mesopotamian societies were not interested in equality,” he told me, “but they were civilized. And they possessed the financial sophistication to understand that, since interest on loans increases exponentially, while economic growth at best follows an S-curve. This means that debtors will, if not protected by a central authority, end up becoming permanent bondservants to their creditors. So Mesopotamian kings regularly rescued debtors who were getting crushed by their debts. They knew that they needed to do this. Again and again, century after century, they proclaimed Clean Slate Amnesties.”

There seem to be two things about Modern Money Theory (MMT) that ttest whether you really understand it or not. I have run into many MMT devotees that seem to have misunderstood these two funsamental ideas.

Do you understand what it means when MMT says the ability of the Federal Reserve Bank to create USA money is infinite?

There seems to be something very fundamental about infinity that non-mathemeticians miss. If you subtract a trillion dollars from an infinite supply how much is left. The answer is “infinity”. If you add 100 trillion dollars to an infinite supply, how much do you now have? The answer is, “Infinity”. Doing mathematical operations on infinity with finite numbers does not change infinity (at least in rudimentary understanding of infinity, and certainly for addition and subtraction). So if you are thinking of doing double entry book keeping, and one account has an infinite supply, you have to realize that the infinite entity behaves very differently from the finite one.

MMT depends on a fundamental accounting identity that measures hom money flows from one economic sector to another. These flows are finite, and you can do normal mathematics on the flow. But the source of the flow of money from the Fed is not finite, so you cannot extend the mathematics of the flows to the source of the Fed’s infinite supply of money.

Because MMT is about money (or monetary policy), do you understand that MMT is not saying that fiscal policy is irrelevant? What MMT focuses on is not everything.

The flow of money among the sectors of the economy imposes some constraints on the various sectors, but it does not control everything within a sector. Once the Fed let’s loose a couple trillion dollars of money into the private sector, it has very little control of what that money is used for. Government’s fiscal policy has more power over the economy than monetary policy, once the monetary policy sets the private sector free of monetary constraints. Any economist that has irrational expectations of what the private sector will do with the money available is not expert about the real world. For instance, when the economy is contracting because people because people are not buying consumer goods, no rational capitalist will use his or her available money to prduce more consumer goods, The availability of consumer goods at prices people cannot afford has little bearing on what they can purchase and keep without repossession.

Back in the 1930s, John Maynard Keynes had an explanation of how fiscal and monetary policy work together. MMT is not a contradiction of that policy. Any modern economist (including some Mobel Prize winners) who thinks that Keynes fundamental insight is not loner applicable should be ashamed of herself or himself for claiming to be an expert. This excludes Milton Friedman, because he had no sense of shame.

New research is zeroing in on a biochemical basis for the placebo effect — possibly opening a Pandora’s box for Western medicine.

The subject interests me because I have been taking a placebo for over 25 years, and it seems to be an important part of my mental health. The last time I tried to wean myself off the placebo, it did not work out well. I’ve decided never to try that experiment again.

In recent essays I’ve made reference to a new framing of what is actually happening when the U.S. treasury issues a bond. It seems to me, this new framing goes to the heart of MMT and might well hold the key to a practical implementation of MMT principles in real world applications. The framing is this:

A U.S. treasury bond is a certificate of issuance of future dollars.

I already understand Modern Money Theory (MMT), so I don’t need any convincing. For those who do not accept the truth off MMT, I fear that they will just think this essay is an attempt to convince them that the naked emperor really is fully clothed if only they looked at him from the proper perspective.

This is a good, detailed, fact-based discussion of the problems of getting accurate and honest election results. Of course it addresses the counting of ballots cast. It does nothing to solve the problems of manipulating who gets to vote and who doesn’t. We need to work both on each type of problem separately and the system of elections as a whole. So the title of the article is a tad overblown, but the article itself is certainly worth reading.

In comparing the approaches discussed in this article to my proposal for an all electronic system is that my proposal uses a distributed verification system, where this article focuses on various forms of centralized verification. My distributed verification makes the voter responsible for checking whether the voter’s intent has been captured correctly before the voter leaves the polling place. The centralized system has only the ballot that was cast to use to determine the voter’s intent with no check on whether the intent was clear by what the ballot looks like. At a higher level there needs to be a discussion of the merits of distributed verification versus centralized verification,

While I think that cryptocurrencies do not make much sense and are destined to end up worthless, (Danielsson 2018a, 2018b), suppose I am wrong. The success of privately issued cryptocurrencies like Bitcoin would come at a considerable cost. It would increase financial instability and wealth inequality, while bringing no discernible benefits.

This article gives some reasons to my own feelings that cryptocurrencies don’t make much sense. I suppose it would present a political/social/economic problem if government were to completely privatize the creation of base money, crypto or not.